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Act swiftly on tax assessments

As tax season looms large, an expert cautions taxpayers to move quickly if they object to their assessments, or face the consequences.

This is based on a recent court case, which demonstrates the need for aggrieved taxpayers to act swiftly if they want to object to an assessment from the South African Revenue Service.

The Tax Administration Act allows taxpayers to object to an assessment, but it must be done within 30 business days of the assessment. If not, the taxpayer must be able to show there were "exceptional circumstances" that prevented them from doing so.

Cliffe Dekker Hofmeyr senior associate Heinrich Louw says the speedy appointment of a tax professional will assist the taxpayer's cause, especially where more than 30 business days might be required to prepare such an objection.

However, the appointment of a tax professional does not absolve a taxpayer from his responsibilities under the act, Louw says in an article.

According to SARS, a senior official may extend the period for lodging an objection if he is satisfied that "reasonable grounds" exist for the delay in lodging the objection.

"The extension may be granted after the 30 business day period has elapsed or alternatively, taxpayers can request an extension before the expiry date of that period if aware that the deadline will not be met," SARS says in its interpretation note that gives guidance to taxpayers on how to lodge an objection.

Louw referred to a case where a taxpayer lodged an objection 65 days late. SARS disallowed the objection, stating that no "exceptional reasons" had been offered. The taxpayer took this decision on appeal.

A taxpayer can ask for an extension, and SARS will consider the reasons for the delay, the length of the delay and the prospects of success on the merits in granting an extension to lodge the objection.

The court held that the onus was on the taxpayer to prove that there were exceptional circumstances which led to the delay.

However, in the case referred to by Louw, the court was not convinced that any of the circumstances offered by the taxpayer satisfied the requirements to allow for an extension or for rendering the objection valid.

The taxpayer (in the appeal case) argued that the delay was caused due to "complex issues of law". The court rejected the argument as the nature of the complexities were never indicated.

The taxpayer also argued that he was in negotiations with SARS, yet there was no evidence that meetings had taken place between them.

According to Louw the court showed some sympathy to an "ignorant taxpayer" who is confronted with an enormous amount of tax to be paid in terms of an assessment.

However, the court found that the taxpayer should have taken his tax responsibility more seriously.

The South African Institute of Tax Professionals advises to start the first step in the objection and appeal process as soon as possible.

"This may involve a request for the reasons for the assessment, but also a request that SARS suspends payment of the amount due," the SAIT says.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.